[Photo of Government Building]
Annual Report September 30, 1999
Oppenheimer
Limited-Term
Government Fund
[Oppenheimer Logo] OppenheimerFunds(R)
The Right Way to Invest
<PAGE>
REPORT HIGHLIGHTS
The Federal Reserve changed its key interest rate five times during the course
of the Fund's fiscal year in response to a worldwide economic dislocation and,
later, signs of recovery and stability.
We effectively used mortgage-backed securities to maintain a high level of
current income for the Fund.
Contents
1 President's Letter
3 An Interview
with Your Fund's
Managers
8 Fund Performance
14 Financial
Statements
34 Independent
Auditors' Report
35 Federal
Income Tax
Information
36 Officers and Trustees
37 OppenheimerFunds Family
- -------------------------------
Average Annual
Total Returns
For the 1-Year Period
Ended 9/30/99*
Class A
Without With
Sales Chg. Sales Chg.
- -------------------------------
2.78% -0.81%
Class B
Without With
Sales Chg. Sales Chg.
- -------------------------------
1.91% -1.96%
Class C
Without With
Sales Chg. Sales Chg.
- -------------------------------
2.01% 1.05%
Class Y
Without With
Sales Chg. Sales Chg.
- -------------------------------
3.15% 3.15%
- -------------------------------
- ----------------------------
Not FDIC Insured.
No Bank Guarantee.
May Lose Value.
- ----------------------------
* See page 12 for further details.
<PAGE>
PRESIDENT'S LETTER
Dear shareholder,
In many ways, the 1999 investment environment has, so far, unfolded as many
expected it would, producing both attractive opportunities and formidable
challenges for investors.
[Photo of James C. Swain] [Photo of Bridget A. Macaskill]
James C. Swain Bridget A. Macaskill
Chairman President
Oppenheimer Oppenheimer
Limited-Term Government Fund Limited-Term Government Fund
On the economic front, early worries about the effects of global weakness
in the wake of last year's credit and currency crises have abated. Instead, as
many economies around the world begin to strengthen, concerns now center around
whether the U.S. economy may be growing too quickly. Throughout the year,
consumers in the United States have continued to spend and borrow heavily, more
than offsetting any temporary slowdown in the industrial and export sectors.
The economy's strength has not gone unnoticed by the nation's monetary
policymakers. In an effort to ward off emerging inflationary pressures, the
Federal Reserve Board increased short-term interest rates this past summer.
Market reaction to robust economic growth has been mixed. The U.S. bond
market has generally declined, as fixed income investors became increasingly
concerned about the effects of rising interest rates.
In the stock market, the performance of largecapitalization growth stocks,
which has driven the market's advance over the past few years, has begun to
moderate, and many previously out-of-favor value-oriented mid-cap and small-cap
stocks have rallied. At the same time, a healthy percentage of actively managed,
diversified portfolios have once again begun to outperform unmanaged stock
indices such as Standard & Poor's 500.
1 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
PRESIDENT'S LETTER
At OppenheimerFunds, we applaud the Fed's pre-emptive strike against inflation.
In our view, history has repeatedly demonstrated that most financial assets do
best in a low-inflation environment. What's more, we believe that the move to
higher interest rates should be temporary.
One recent development is quite troublesome to us however: the increasing
popularity of "day trading" among individuals seeking to make fast money in a
volatile stock market. In our opinion, day trading is not investing, it is
gambling. Experience proves that without extensive research and analysis,
attempting to time short-term price swings is a fool's errand. Instead, we
continue to encourage investors to maintain a long-term perspective that is
measured in years, not days.
Finally, while we remain alert to the potential impact of the Y2K issue,
we are encouraged by the progress made in addressing the matter. At
OppenheimerFunds, our shareholder accounting systems are already Y2K compliant,
and we have successfully participated in all required industrywide tests. We
intend to continue retesting our systems in order to help further protect
against any potential problems. After all, whether in our computer accounting
systems or the financial markets, managing risk is an important part of what
makes OppenheimerFunds The Right Way to Invest.
Sincerely,
/s/ James C. Swain /s/ Bridget A. Macaskill
James C. Swain Bridget A. Macaskill
October 21, 1999
2 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
Q How did the Fund perform during the period?
A. During the fiscal year that ended September 30, 1999, the Fund delivered an
average annual total return of 2.78% for Class A Shares before deducting sales
charges. The 30-day standardized yield at September 30, 1999, was 5.43%,
compared to 4.61% one year earlier. Monthly dividend payments on Class A shares
declined slightly, from $0.05350 per share to $0.05120 per share, largely due to
an overall decline in interest rates during the 12-month period.
[Photo of Portfolio Management Team]
Portfolio Management
Team (l to r)
John Kowalik
Leslie Falconio
Gina Palmieri
What happened to interest rates and the fixed income markets during the period?
Just before the Fund's 1999 fiscal year began, the Federal Reserve enacted the
first of three 0.25% cuts in its key interest rate. The fixed income markets had
been in turmoil for several months, due to economic and financial problems in
Asia and Russia. As the economic crisis spread worldwide, fears arose that the
U.S. economy might slip into a recession. By reducing interest rates throughout
the fall, the Fed indicated its willingness to help stabilize the economic
situation at home and abroad.
As investors seeking high quality investments bid up prices on Treasuries,
the spread, or difference in yields, between U.S. Treasuries and other fixed
income securities (i.e., "spread products") widened considerably in August and
September 1998. But as the Fed continued to be supportive and investors regained
confidence, spread products reclaimed some of their performance over Treasuries
in October, November and December.
3 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
The fears of a U.S. recession proved unfounded. By January, it was clear that
our economy continued to expand at a very strong rate. Anticipating inflationary
pressures and higher interest rates, investors now demanded higher yields on
Treasuries. Treasury yields climbed, and spreads between Treasuries and
non-Treasuries quickly narrowed.
[Begin Sidebar Text]
"The past twelve
months clearly
demonstrated
that the superior
design of the Fund
and our active
management style
have made a
positive difference
for investors."
[End Sidebar Text]
In early 1999, world markets began to stabilize. The U.S. inflation rate
remained low, while consumer spending and corporate earnings continued to grow.
With the signs of worldwide recession fading, the Fed began reversing the
interest rate reductions it made in 1998, raising its key rate 0.25% in both
June and August. By September, the securities markets seemed to be preparing for
a third rate hike.
How did you adjust the Fund's holdings as interest rates changed?
Our extensive research on Treasury securities shows that the short to
intermediate part of the Treasury yield curve provides the greatest return per
unit of risk involved. In short, we believe this is the "sweet spot" on the
Treasury yield curve and provides superior long-term returns. Generally, we keep
our Treasury holdings within this range, moving to the short or long end of the
range based on our view of interest rate trends. This provides a measure of
price stability for the Fund, while the use of mortgage-backed securities (MBSs)
enhances both its yield and total return.
4 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
MBSs are subject to prepayment risk, or the possibility that property owners
will refinance their mortgages, especially when interest rates fall. Due to this
risk and the uncertainty associated with it, MBSs offer higher yields than
Treasuries. They may outperform Treasuries when interest rates rise but provide
their best total returns when interest rates are stable.
[Begin Sidebar Text]
- -------------------------------------------
Average Annual
Total Returns
For the Periods Ended 9/30/99(1)
Class A
1-Year 5-Year 10-Year
- -------------------------------------------
- -0.81% 5.56% 6.93%
Class B Since
1-Year 5-Year Inception
- -------------------------------------------
- -1.96% 5.34% 4.75%
Class C Since
1-Year 5-Year Inception
- -------------------------------------------
1.05% N/A 5.53%
Class Y Since
1-Year 5-Year Inception
- -------------------------------------------
3.15% N/A 5.05%
- -------------------------------------------
[End Sidebar Text]
At the start of the fiscal year, the Fund was underweighted in MBSs, which
was fortunate, since they generally underperform when rates decline. By October
and November, MBSs had become relatively inexpensive and offered attractive
return potential, so we steadily increased the MBS allocation to nearly 50% of
assets.
How did changing the allocation to MBSs impact the Fund?
MBSs were a major contributor to the Fund's performance. When interest rates
rose in January, our Treasury investments lost some value. Fortunately, we were
still focused on shorter-term issues, so the impact was minimized. And any
impact was offset by results in the MBS portfolio, which performed very well. We
owned short average maturity collateralized mortgage obligations (CMOs), which
have collateral to secure payment of interest and principal. Generally less
volatile than generic MBSs as rates change, these particular CMOs offer much
higher yields than comparable Treasuries.
1. See page 12 for further details.
5 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
AN INTERVIEW WITH YOUR FUND'S MANAGERS
After April, we moved the Fund's duration (a measure of sensitivity to interest
rate changes) to a relatively neutral position from a slightly defensive one. We
also trimmed our MBS holdings and began a period of "cherry picking." Despite
fairly predictable interest rates in recent months, mortgage-backed securities
have not done as well as might be expected. Although we do not foresee any major
problems from Y2K, corporations are issuing debt in advance of that event,
flooding the markets with an alternative to MBSs. The spillover effect has made
MBSs more volatile than the interest rate and economic situation warrant. For
this reason, we have held the Fund's MBS allocation below normal levels since
mid-summer while actively taking advantage of short-term anomalies in the
marketplace. For instance, we have purchased MBSs and CMOs whose prices were
depressed temporarily and traded them quickly when their prices rebounded.
[Begin Sidebar Text]
- -----------------------------
Standardized Yields(2)
For the 30 Days Ended 9/30/99
- -----------------------------
Class A 5.43%
- -----------------------------
Class B 4.87
- -----------------------------
Class C 4.87
- -----------------------------
Class Y 6.11
- -----------------------------
[End Sidebar Text]
What is your outlook for the Fund over the coming months?
We believe a third interest rate increase is possible, even probable, before the
calendar year-end. However, it may be a non-event--simply the last step in
getting back to "business as usual." The markets have already factored in this
possibility. Investors also seem comfortable that the Fed has promised to
provide adequate liquidity to help the markets deal with any Y2K issues.
2. Standardized yield is based on net investment income for the 30-day period
ended September 30, 1999. Falling share prices will tend to artificially raise
yields.
6 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
We look for interest rates to remain in a relatively narrow range, which should
bode well for the Fund's MBS portfolio. In fact, we expect to increase our MBS
investments in the coming quarter. This should help to keep the Fund's income
strong while our emphasis on the shortest of intermediate Treasuries keeps its
value relatively consistent--just two of the reasons why Oppenheimer
Limited-Term Government Fund is part of The Right Way to Invest.
[Begin Sidebar Text]
[Begin Tabular Description of Pie Chart]
- -------------------------------
Credit Allocation(3)
U.S. Government 46.0%
U.S. Agency 45.3
AAA 8.7
- -------------------------------
[End Sidebar Text]
[End Tabular Description of Pie Chart]
Top 5 Holdings by Issuer(4)
- ------------------------------------------------------------
U.S. Treasury 46.0%
- ------------------------------------------------------------
Federal National Mortgage Assn. 21.7
- ------------------------------------------------------------
Federal Home Loan Mortgage Corp. 13.1
- ------------------------------------------------------------
Government National Mortgage Assn. 10.5
- ------------------------------------------------------------
Treasury Repos 8.7
3. Portfolio data is as of September 30, 1999, is subject to change, and is
dollar-weighted based on invested assets. The Fund may invest in securities of
any maturity, including those issued by federally chartered mortgage companies
whose interest and principal repayments are not guaranteed by the U.S.
Government. U.S. Treasury securities are not rated but are deemed to have the
highest rating equivalency.
4. Portfolio is subject to change. Percentages are as of September 30, 1999, and
are based on total market value of investments.
7 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
FUND PERFORMANCE
How has the Fund performed?
Below is a discussion, by the Manager, of the Fund's performance during its
fiscal year ended September 30, 1999, followed by a graphical comparison of the
Fund's performance to an appropriate broad-based market index and a sector
index.
Management's discussion of performance. The first half of the fiscal year
that ended September 30, 1999, was a period of volatile interest rates, due to
worldwide economic issues, three Federal Reserve interest-rate reductions and
investor reaction to potentially higher inflation in the United States. Yield
spreads between Treasuries and other securities initially widened considerably
and then contracted rapidly. To protect the Fund against fluctuating interest
rates, we maintained a shorter-duration Treasury portfolio and selectively
purchased and sold short-term collateralized mortgage obligations and other
mortgage-backed securities.
In contrast, the second half of the fiscal year saw a return to more
normal yield spreads and two widely anticipated Federal Reserve interest-rate
increases. Due to technical factors, including a larger-than-usual supply of
alternative fixed income investments, mortgage-backed securities as a whole did
not fare particularly well. During this period, the Fund selectively purchased
inexpensive MBSs that offered reduced prepayment risk and, therefore, less
volatility. These instruments provided important diversification for the Fund
and boosted its current and effective yields. The Fund's portfolio holdings,
allocations and strategies are subject to change.
Comparing the Fund's performance to the market. The graphs that follow
show the performance of a hypothetical $10,000 investment in each class of
shares of the Fund held until September 30, 1999. In the case of Class A shares,
performance is measured over a 10-year period. In the case of Class B shares,
performance is measured from inception of the
8 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
class on May 3, 1993. In the case of Class C shares, performance is measured
from inception of the class on February 1, 1995. In the case of Class Y shares,
performance is measured from the inception of the class on January 26, 1998. The
Fund's performance reflects the deduction of the maximum initial sales charge on
Class A shares, the applicable contingent deferred sales charge on Class B and
Class C shares, and reinvestments of all dividends and capital gains
distributions.
The Fund's performance is compared to the performance of the Lehman
Brothers U.S. Government Bond Index and the Lehman Brothers 1-3 Year Government
Bond Index. The Lehman Brothers U.S. Government Bond Index is a broad-based
unmanaged index of U.S. Treasury issues, publicly issued debt of U.S. Government
agencies and quasi-public corporations and corporate debt guaranteed by the U.S.
Government. This index is widely used to measure the performance of the U.S.
Government securities market. The Lehman Brothers 1-3 Year Government Bond Index
is an unmanaged sector index of U.S. Treasury issues, publicly issued debt of
U.S. Government agencies and quasi-public corporations and corporate debt
guaranteed by the U.S. Government with maturities of one to three years. This
secondary index comparison is included to reflect the adoption by the Fund,
effective May 1, 1994, of the investment policy that the Fund will, under normal
circumstances, seek to maintain a dollar-weighted average portfolio effective
duration of not more than three years.
Index performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none of the data
in the graphs that follow shows the effect of taxes. The Fund's performance
reflects the effects of Fund business and operating expenses. While index
comparisons may be useful to provide a benchmark for the Fund's performance, it
must be noted that the Fund's investments are not limited to the securities in
the indices.
9 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
FUND PERFORMANCE
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class A), Lehman Brothers
U.S. Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index
[Begin Tabular Representation of Line Chart]
<TABLE>
<CAPTION>
Oppenheimer Limited-Term Lehman Brothers Lehman Brothers
Government Fund Class A U.S. Government Bond Index 1-3 Year Government Bond Index
<S> <C> <C> <C>
9/30/89 9650 10000 10000
10532 10693 10932
9/30/91 12080 12346 12163
13273 13942 13369
9/30/93 14283 15487 14029
14389 14862 14190
9/30/95 15544 16878 15352
16405 17624 16222
9/30/97 17655 19238 17338
19015 21853 18712
9/30/99 19544 21481 19309
</TABLE>
[End Tabular Representation of Line Chart]
Average Annual Total Return of Class A Shares of the Fund at 9/30/99(1)
1-Year -0.81% 5-Year 5.56% 10-Year 6.93%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class B), Lehman Brothers
U.S. Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index
[Begin Tabular Representation of Line Chart]
<TABLE>
<CAPTION>
Oppenheimer Limited-Term Lehman Brothers Lehman Brothers
Government Fund Class B U.S. Government Bond Index 1-3 Year Government Bond Index
<S> <C> <C> <C>
5/3/93 10000 10000 10000
9/30/93 10283 10542 10188
9/30/94 10265 10117 10305
9/30/95 11001 11489 11149
9/30/96 11523 11997 11780
9/30/97 12310 13096 12591
9/30/98 13159 14876 13589
9/30/99 13411 14623 14023
</TABLE>
[End Tabular Representation of Line Chart]
Average Annual Total Return of Class B Shares of the Fund at 9/30/99(1)
1-Year -1.96% 5-Year 5.34% Life 4.75%
1. See page 12 for further details.
10 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class C), Lehman Brothers
U.S. Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index
[Begin Tabular Representation of Line Chart]
<TABLE>
<CAPTION>
Oppenheimer Limited-Term Lehman Brothers Lehman Brothers
Government Fund Class C U.S. Government Bond Index 1-3 Year Government Bond Index
<S> <C> <C> <C>
2/1/95 10000 10000 10000
9/30/95 10547 11110 10673
9/30/96 11044 11601 11277
9/30/97 11798 12664 12053
9/30/98 12601 14386 13009
9/30/99 12856 14141 13424
</TABLE>
[Begin Tabular Representation of Line Chart]
Average Annual Total Return of Class C Shares of the Fund at 9/30/99(1)
1-Year 1.05% Life 5.53%
Class Y Shares
Comparison of Change in Value of $10,000 Hypothetical Investments in:
Oppenheimer Limited-Term Government Fund (Class Y), Lehman Brothers
U.S. Government Bond Index and Lehman Brothers 1-3 Year Government Bond Index
[Begin Tabular Representation of Line Chart]
<TABLE>
<CAPTION>
Oppenheimer Limited-Term Lehman Brothers Lehman Brothers
Government Fund Class Y U.S. Government Bond Index 1-3 Year Government Bond Index
<S> <C> <C> <C>
1/26/98 10000 10000 10000
9/30/98 10530 10832 10515
9/30/99 10862 10648 10850
</TABLE>
[End Tabular Representation of Line Chart]
Average Annual Total Return of Class Y Shares of the Fund at 9/30/99(1)
1-Year 3.15% Life 5.05%
The performance information for both indices in the graphs begins on 9/30/89 for
Class A, 4/30/93 for Class B, 1/31/95 for Class C and 1/31/98 for Class Y.
Past performance is not predictive of future performance. Graphs are not drawn
to the same scale.
11 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
NOTES
In reviewing performance and rankings, please remember that past performance
does not guarantee future results. Investment return and principal value of an
investment in the Fund will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than the original cost. The Fund's
performance may from time to time be subject to substantial short-term changes,
particularly during periods of market or interest rate volatility. For updates
on the Fund's performance, please contact your financial advisor, call us at
1.800.525.7048 or visit our website, www.oppenheimerfunds.com.
Total returns and the ending account values in the graphs include changes in
share price and reinvestment of dividends and capital gains distributions in a
hypothetical investment for the periods shown.
Class A shares of the Fund were first publicly offered on 3/10/86. The average
annual total returns are shown net of the applicable 3.50% maximum initial sales
charge. The Fund's maximum sales charge for Class A shares was higher prior to
2/23/94, so actual performance may have been lower.
Class B shares of the Fund were first publicly offered on 5/3/93. The average
annual total returns are shown net of the applicable contingent deferred sales
charges of 4% (1-year) and 1% (5-year). Because Class B shares convert to Class
A shares 72 months after purchase, the "life-of-class" return for Class B uses
Class A performance for the period after conversion. Class B shares are subject
to an annual 0.75% asset-based sales charge.
Class C shares of the Fund were first publicly offered on 2/1/95. The average
annual total returns are shown net of the applicable 1% contingent deferred
sales charge for the one-year period. Class C shares are subject to an annual
0.75% asset-based sales charge.
Class Y shares of the Fund were first publicly offered on 1/26/98. Class Y
shares are offered only to certain institutional investors under special
agreement with the Distributor.
An explanation of the different performance calculations is in the Fund's
prospectus.
12 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
- --------------------------------------------------------------------------------
Financials
13 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
STATEMENT OF INVESTMENTS September 30, 1999
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
==========================================================================================================================
<S> <C> <C>
Mortgage-Backed Obligations--47.6%
- --------------------------------------------------------------------------------------------------------------------------
Government Agency--47.6%
- --------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored--36.6%
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
Series 151, Cl. F, 9%, 5/15/21 $ 1,432,626 $ 1,490,820
Series 1092, Cl. K, 8.50%, 6/15/21 3,611,885 3,725,877
Series 1295, Cl. J, 7.50%, 3/15/07 4,316,244 4,371,536
Series 1451, Cl. G, 7%, 9/15/06 2,144,941 2,155,666
Series 1541, Cl. H, 7%, 10/15/22 6,500,000 6,439,030
Series 1561, Cl. H, 6.50%, 5/15/08 10,000,000 9,934,300
Series 1625, Cl. G, 5.75%, 1/15/08 5,000,000 4,928,100
Series 1650, Cl. H, 6.25%, 10/15/22 10,000,000 9,746,800
Series 1675, Cl. G, 6%, 2/15/20 8,403,000 8,311,071
Series 1702-A Cl. PD, 6.50%, 4/15/22 6,250,000 6,152,312
Series 2006, Cl. B, 6.50%, 8/15/23 4,854,742 4,827,410
- --------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Multiclass Mtg.
Participation Certificates:
7.50%, 9/1/12 27,689,596 28,134,291
9.25%, 11/1/08 250,958 259,823
10%, 8/1/21 711,631 775,512
10%, 8/1/21 689,299 752,468
11.50%, 2/1/16 387,240 434,375
11.50%, 6/1/20 756,543 841,073
11.75%, 1/1/16 201,379 224,874
11.75%, 4/1/19 855,682 964,715
13%, 8/1/15 1,856,340 2,183,086
Series 1737, Cl. H, 6%, 1/15/23 20,000,000 19,362,500
- --------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only
Stripped Mtg. Backed Securities:
Series 164, Cl. A, 6.523%, 3/1/24(1) 9,963,302 3,319,025
Series 176, Cl. IO, 0.805%-40.586%, 6/1/26(1) 18,053,594 5,348,377
Series 183, Cl. IO, 11.038%-28.627%, 4/1/27(1) 9,151,000 2,725,282
Series 192, Cl. IO, 18.846%, 2/1/28(1) 5,881,883 1,799,489
Series 194, Cl. IO, 10.38%-10.885%, 4/1/28(1) 12,414,059 3,924,006
Series 197, Cl. IO, 9.489%-16.055%, 4/1/28(1) 57,821,564 18,069,240
Series 199, Cl. IO, 14.657%-22.586%, 8/1/28(1) 45,765,587 14,573,480
Series 202, Cl. IO, 12.123%-13.151%, 4/1/29(1) 36,421,620 12,013,443
Series 1627, Cl. IO, 11.877%, 9/15/22(1) 4,000,000 998,750
Series 2178, Cl. PI, 10.383%, 8/15/29(1) 15,800,000 3,950,000
- --------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.-Government National
Mortgage Assn., Gtd. Multiclass Mtg. Participation Certificates,
Series 32, Cl. TG, 7%, 1/25/21 2,000,000 2,008,740
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
6%, 8/1/13 30,170,594 29,039,197
6.50%, 1/1/29-5/1/29 56,165,420 53,869,940
7%, 7/1/13-8/1/29 57,360,366 56,604,932
7.50%, 10/1/29(2) 25,000,000 25,070,250
</TABLE>
14 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- --------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/Sponsored Continued
<S> <C> <C>
7.50%, 6/1/25-9/1/29 $13,681,205 $ 13,726,386
9%, 8/1/19 268,717 281,949
9.50%, 11/1/21 190,723 202,476
10.50%, 12/1/14 803,895 880,956
11%, 11/1/15-7/20/19 10,555,564 11,730,534
11.25%, 6/1/14-2/15/16 1,895,409 2,114,937
11.50%, 8/15/13-2/15/16 4,489,950 5,059,125
11.75%, 7/1/11-11/1/15 271,567 302,664
12%, 1/1/16-4/15/19 6,387,490 7,259,840
12.50%, 8/1/15 481,368 553,670
13%, 8/1/10-8/1/26 3,125,937 3,645,788
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Multiclass Mtg. Participation Certificates:
Trust 1993-188, Cl. PH, 6.25%, 3/25/13 10,000,000 9,881,200
Trust 1994-56, Cl. H, 6%, 7/25/22 6,000,000 5,776,860
Trust 1998-19, Cl. PK, 6%, 9/18/26 4,000,000 3,688,720
Trust 1998-30, Cl. QB, 6.50%, 4/18/19 9,000,000 8,988,750
Trust 1999-19, Cl. TC, 6.50%, 11/25/11 5,000,000 4,945,300
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1990-18, Cl. K, 9.60%, 3/25/20 3,455,436 3,647,628
Trust 1992-34, Cl. G, 8%, 3/25/22 2,940,000 3,006,150
Trust 1992-188, Cl. PG, 6.65%, 1/25/17 1,320,790 1,318,717
Trust 1993-183, Cl. G, 6%, 1/25/19 6,500,000 6,426,875
Trust 1994-27, Cl. PH, 6.50%, 9/25/22 4,000,000 3,943,720
Trust 1994-51, Cl. PF, 6.50%, 1/25/23 5,000,000 4,912,500
Trust 1997-63, Cl. PC, 6.50%, 3/18/26 7,500,000 7,373,400
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
8%, 1/1/23 105,986 108,433
12.50%, 12/1/15 1,493,277 1,731,852
Trust 1991-169, Cl. PK, 8%, 10/25/21 595,000 606,525
Trust 1991-170, Cl. E, 8%, 12/25/06 1,590,744 1,624,039
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Gtd. Multiclass Mtg. Participation Certificates,
Trust 1997-9, Cl. H, 8.808%, 3/25/27(1) 13,437,000 4,753,339
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Trust 252, Cl. 2, 17.467%, 11/1/23(1) 6,636,354 1,921,432
Trust 302, Cl. 2, 9.867%-9.945%, 6/2/29(1) 24,653,524 7,950,762
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security:
Trust 291, Cl. 1, 2.645%-3.403%, 11/1/27(3) 14,499,204 11,110,015
Trust 1997-44, Cl. B, 5.407%, 6/25/08(3) 3,000,000 2,268,750
- --------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Stripped Mtg.-Backed Security,
Trust G, Cl. 2, 11.50%, 3/1/09 1,203,504 1,316,333
--------------
492,389,415
</TABLE>
15 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
STATEMENT OF INVESTMENTS Continued
<TABLE>
<CAPTION>
Face Market Value
Amount See Note 1
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GNMA/Guaranteed--11.0%
Government National Mortgage Assn.:
6.50%, 1/15/24 $ 3,137,566 $ 3,026,905
7%, 1/15/28-8/15/28 8,279,265 8,128,343
7.50%, 10/15/25-9/15/28 90,259,597 90,648,280
8%, 9/15/07-10/15/28 8,970,351 9,177,570
8.50%, 8/15/17-9/15/21 21,803,752 22,859,741
9.50%, 9/15/17 63,232 67,237
10.50%, 1/15/16-7/15/21 1,319,710 1,451,452
11%, 3/15/00-10/20/19 2,481,014 2,757,088
11.50%, 1/15/13-5/15/13 232,997 259,919
13%, 2/15/11-9/15/14 28,646 32,912
- --------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Collateralized Mtg.
Obligations, Series 1999-1, Cl. VC. 6.50%, 9/20/13 5,000,000 4,715,625
- --------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security, Series 1999-29, Cl. PI, 11.342%, 7/16/28(1) 17,395,833 5,197,005
--------------
148,322,077
--------------
Total Mortgage-Backed Obligations (Cost $638,906,945) 640,711,492
==========================================================================================================================
U.S. Government Obligations--48.4%
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
6%, 8/15/04 28,000,000 28,280,000
8.75%, 11/15/08(4) 40,000,000 43,812,520
STRIPS, 6.44%, 11/15/18(5) 61,150,000 17,764,503
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
5.625%, 5/15/01 28,000,000 28,000,000
5.625%, 5/15/08 38,940,000 37,820,475
5.75%, 4/30/03 35,810,000 35,765,237
6.125%, 8/15/07 3,100,000 3,104,845
6.50%, 10/15/06 4,710,000 4,815,975
6.50%, 5/31/01 48,000,000 48,645,024
6.50%, 5/31/02 22,700,000 23,139,813
7.50%, 11/15/01 67,000,000 69,449,721
7.50%, 2/15/05 92,500,000 98,888,328
7.875%, 11/15/04 77,550,000 84,069,086
8.50%, 11/15/20 78,800,000 81,410,250
8.75%, 8/15/00(4) 44,550,000 45,858,656
--------------
Total U.S. Government Obligations (Cost $672,489,818) 650,824,433
</TABLE>
16 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
<TABLE>
<CAPTION>
Market Value
Date Strike Contracts See Note 1
==========================================================================================================================
<S> <C> <C> <C> <C>
Options Purchased--0.0%
- --------------------------------------------------------------------------------------------------------------------------
U.S. Long Bond Futures, 12/99
Call Opt. 10/22/99 $117 330 $ 41,250
- --------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bond Futures, 12/99
Call Opt. 10/22/99 116 150 42,187
----------------
Total Options Purchased (Cost $84,869) 83,437
Face
Amount
==========================================================================================================================
Repurchase Agreements--9.2%
- --------------------------------------------------------------------------------------------------------------------------
Repurchase agreement with First Chicago Capital Markets, 5.29%, dated 9/30/99,
to be repurchased at $123,118,089 on 10/1/99, collateralized by U.S. Treasury
Bonds, 7.125%-8.125%, 5/15/21-2/15/23, with a value of $89,456,258, U.S.
Treasury Bills, 11/4/99, with a value of $36,228,950 (Cost $123,100,000) $123,100,000 123,100,000
- --------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (Cost $1,434,581,632) 105.2% 1,414,719,362
- --------------------------------------------------------------------------------------------------------------------------
Liabilities in Excess of Other Assets (5.2) (69,935,731)
---------------------------------------
Net Assets 100.0% $1,344,783,631
=======================================
</TABLE>
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields upon the
current cost basis and estimated timing and amount of future cash flows.
These securities amount to $86,543,630 or 6.44% of the Fund's net assets as of
September 30, 1999.
2. When-issued security to be delivered and settled after September 30, 1999.
3. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
4. Securities with an aggregate market value of $2,227,010 are held in
collateralized accounts to cover initial margin requirements on open futures
sales contracts. See Note 5 of Notes to Financial Statements.
5. For zero coupon bonds, the interest rate shown is the effective yield on the
date of purchase.
See accompanying Notes to Financial Statements.
17 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES September 30, 1999
<TABLE>
<S> <C>
==========================================================================================================================
Assets
Investments, at value (cost $1,434,581,632)--see accompanying statement $ 1,414,719,362
- --------------------------------------------------------------------------------------------------------------------------
Cash 40,026
- --------------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and principal paydowns 18,236,515
Shares of beneficial interest sold 4,878,183
Other 54,335
-----------------
Total assets 1,437,928,421
==========================================================================================================================
Liabilities
- --------------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $25,098,958 purchased on a when-issued basis)--Note 1 75,814,900
Shares of beneficial interest redeemed 13,858,390
Dividends 1,576,079
Distribution and service plan fees 832,844
Daily variation on futures contracts--Note 5 571,172
Transfer and shareholder servicing agent fees 166,473
Trustees' compensation 1,515
Other 323,417
-----------------
Total liabilities 93,144,790
==========================================================================================================================
Net Assets $ 1,344,783,631
=================
==========================================================================================================================
Composition of Net Assets
- --------------------------------------------------------------------------------------------------------------------------
Paid-in capital $ 1,388,079,061
- --------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 14,065
- --------------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investment transactions (23,417,850)
- --------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments--Notes 3 and 5 (19,891,645)
-----------------
Net assets $ 1,344,783,631
=================
</TABLE>
18 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
<TABLE>
<S> <C>
==========================================================================================================================
Net Asset Value Per Share
- --------------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$734,406,507 and 73,256,414 shares of beneficial interest outstanding) $10.03
Maximum offering price per share (net asset value plus sales charge
of 3.50% of offering price) $10.39
- --------------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $399,691,875
and 39,874,469 shares of beneficial interest outstanding) $10.02
- --------------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $210,616,317
and 21,039,800 shares of beneficial interest outstanding) $10.01
- --------------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on
net assets of $68,932 and 6,871 shares of beneficial interest outstanding) $10.03
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying Notes to Financial Statements.
19 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
STATEMENT OF OPERATIONS For the Year Ended September 30, 1999
<TABLE>
<S> <C>
==========================================================================================================================
Investment Income
- --------------------------------------------------------------------------------------------------------------------------
Interest $ 87,256,978
==========================================================================================================================
Expenses
- --------------------------------------------------------------------------------------------------------------------------
Management fees--Note 4 5,173,945
- --------------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees--Note 4:
Class A 1,705,756
Class B 3,507,623
Class C 1,870,414
- --------------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees--Note 4 1,468,623
- --------------------------------------------------------------------------------------------------------------------------
Shareholder reports 283,067
- --------------------------------------------------------------------------------------------------------------------------
Registration and filing fees 229,944
- --------------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses 101,934
- --------------------------------------------------------------------------------------------------------------------------
Legal, auditing and other professional fees 33,073
- --------------------------------------------------------------------------------------------------------------------------
Accounting service fees--Note 4 12,000
- --------------------------------------------------------------------------------------------------------------------------
Trustees' compensation 8,621
- --------------------------------------------------------------------------------------------------------------------------
Other 44,880
--------------
Total expenses 14,439,880
Less expenses paid indirectly--Note 1 (55,746)
--------------
Net expenses 14,384,134
==========================================================================================================================
Net Investment Income 72,872,844
==========================================================================================================================
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (18,358,713)
Closing of futures contracts 8,393,472
--------------
Net realized loss (9,965,241)
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation on investments (33,958,973)
--------------
Net realized and unrealized loss (43,924,214)
==========================================================================================================================
Net Increase in Net Assets Resulting from Operations $ 28,948,630
==============
</TABLE>
See accompanying Notes to Financial Statements.
20 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended September 30, 1999 1998
==========================================================================================================================
<S> <C> <C>
Operations
- --------------------------------------------------------------------------------------------------------------------------
Net investment income $ 72,872,844 $ 55,975,556
- --------------------------------------------------------------------------------------------------------------------------
Net realized loss (9,965,241) (5,166,494)
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation or depreciation (33,958,973) 14,062,843
-----------------------------------------
Net increase in net assets resulting from operations 28,948,630 64,871,905
==========================================================================================================================
Dividends and/or Distributions to Shareholders
- --------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (42,378,009) (38,031,985)
Class B (18,660,011) (12,153,183)
Class C (9,960,199) (5,790,342)
Class Y (100) (46)
- --------------------------------------------------------------------------------------------------------------------------
Dividends in excess of net investment income:
Class A -- (1,307,734)
Class B -- (417,888)
Class C -- (199,101)
Class Y -- (2)
==========================================================================================================================
Beneficial Interest Transactions
- --------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest
transactions--Note 2:
Class A 123,299,873 106,066,201
Class B 134,345,727 91,996,096
Class C 73,497,654 69,044,172
Class Y 68,029 1,000
==========================================================================================================================
Net Assets
- --------------------------------------------------------------------------------------------------------------------------
Total increase 289,161,594 274,079,093
- --------------------------------------------------------------------------------------------------------------------------
Beginning of period 1,055,622,037 781,542,944
-----------------------------------------
End of period [including undistributed (overdistributed)
net investment income of $14,065 and $(189), respectively] $1,344,783,631 $1,055,622,037
=========================================
</TABLE>
See accompanying Notes to Financial Statements.
21 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Class A Year Ended September 30, 1999 1998 1997 1996 1995
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.37 $10.30 $10.26 $10.44 $10.40
Income (loss) from investment operations:
Net investment income .63 .67 .73 .75 .79
Net realized and unrealized gain (loss) (.35) .10 .03 (.19) .01
- -----------------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .28 .77 .76 .56 .80
- -----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.62) (.68) (.71) (.71) (.76)
Dividends in excess of net investment income -- (.02) -- -- --
Tax return of capital distribution -- -- (.01) (.03) --
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.62) (.70) (.72) (.74) (.76)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.03 $10.37 $10.30 $10.26 $10.44
=======================================================================
=============================================================================================================================
Total Return, at Net Asset Value(1) 2.78% 7.70% 7.62% 5.54% 8.03%
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $734,407 $634,677 $524,508 $436,889 $346,015
- -----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $696,607 $584,171 $443,514 $393,727 $274,313
- -----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 6.23% 6.52% 7.13% 7.22% 7.64%
Expenses 0.84% 0.82%(3) 0.87%(3) 0.87%(3) 0.91%(3)
- -----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 141% 161% 68% 71% 261%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $1,992,789,507 and $1,668,882,501, respectively.
See accompanying Notes to Financial Statements.
22 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
<TABLE>
<CAPTION>
Class B Year Ended September 30, 1999 1998 1997 1996 1995
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.37 $ 10.30 $ 10.26 $ 10.44 $ 10.41
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 .60 .66 .67 .71
Net realized and unrealized gain (loss) (.37) .09 .02 (.19) .01
----------------------------------------------------------------------
Total income (loss) from
investment operations .19 .69 .68 .48 .72
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.60) (.63) (.63) (.69)
Dividends in excess of net investment income -- (.02) -- -- --
Tax return of capital distribution -- -- (.01) (.03) --
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.54) (.62) (.64) (.66) (.69)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.02 $10.37 $10.30 $10.26 $10.44
======================================================================
============================================================================================================================
Total Return, at Net Asset Value(1) 1.91% 6.90% 6.82% 4.74% 7.18%
- ----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $399,692 $277,381 $183,476 $160,572 $121,178
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $351,099 $210,362 $171,496 $147,017 $ 72,131
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 5.48% 5.76% 6.39% 6.46% 6.80%
Expenses 1.59% 1.58%(3) 1.62%(3) 1.62%(3) 1.71%(3)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 141% 161% 68% 71% 261%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $1,992,789,507 and $1,668,882,501, respectively.
See accompanying Notes to Financial Statements.
23 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
FINANCIAL HIGHLIGHTS Continued
<TABLE>
<CAPTION>
Class C Year Ended September 30, 1999 1998 1997 1996 1995(5)
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Per Share Operating Data
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.35 $10.29 $10.25 $10.43 $10.32
- ----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .56 .59(6) .66 .66 .45
Net realized and unrealized gain (loss) (.36) .09(6) .02 (.18) .10
----------------------------------------------------------------------
Total income (loss) from
investment operations .20 .68 .68 .48 .55
- ----------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.54) (.61) (.63) (.63) (.44)
Dividends in excess of net investment income -- (.01) -- -- --
Tax return of capital distribution -- -- (.01) (.03) --
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders (.54) (.62) (.64) (.66) (.44)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.01 $10.35 $10.29 $10.25 $10.43
======================================================================
============================================================================================================================
Total Return, at Net Asset Value(1) 2.01% 6.81% 6.83% 4.71% 5.47%
- ----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
Ratios/Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $210,616 $143,563 $73,559 $45,356 $14,569
- ----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $187,226 $100,604 $57,506 $32,349 $ 6,112
- ----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 5.47% 5.73% 6.35% 6.34% 6.51%
Expenses 1.59% 1.57%(3) 1.62%(3) 1.64%(3) 1.80%(3)
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 141% 161% 68% 71% 261%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $1,992,789,507 and $1,668,882,501, respectively.
5. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
6. Per share amounts calculated on the average shares outstanding during
the period.
See accompanying Notes to Financial Statements.
24 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
<TABLE>
<CAPTION>
Class Y Year Ended September 30, 1999 1998(7)
=====================================================================================================================
<S> <C> <C>
Per Share Operating Data
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $10.37 $10.33
- ---------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .66 .47
Net realized and unrealized gain (loss) (.34) .06
- ---------------------------------------------------------------------------------------------------------------------
Total income (loss) from
investment operations .32 .53
- ---------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment income (.66) (.47)
Dividends in excess of net investment income -- (.02)
Tax return of capital distribution -- --
--------------------------------
Total dividends and distributions to shareholders (.66) (.49)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $10.03 $10.37
================================
=====================================================================================================================
Total Return, at Net Asset Value(1) 3.15% 5.30%
- ---------------------------------------------------------------------------------------------------------------------
=====================================================================================================================
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $69 $1
- ---------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 2 $1
- ---------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:(2)
Net investment income 6.75% 6.82%
Expenses 0.60% 0.43%(3)
- ---------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(4) 141% 161%
</TABLE>
1. Assumes a $1,000 hypothetical initial investment on the business day before
the first day of the fiscal period (or inception of offering), with all
dividends and distributions reinvested in additional shares on the reinvestment
date, and redemption at the net asset value calculated on the last business day
of the fiscal period. Sales charges are not reflected in the total returns.
Total returns are not annualized for periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the effect of expenses paid indirectly by the Fund.
4. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities owned
during the period. Securities with a maturity or expiration date at the time of
acquisition of one year or less are excluded from the calculation. Purchases and
sales of investment securities (excluding short-term securities) for the period
ended September 30, 1999, were $1,992,789,507 and $1,668,882,501, respectively.
5. For the period from February 1, 1995 (inception of offering) to September 30,
1995.
6. Per share amounts calculated on the average shares outstanding during the
period.
7. For the period from January 26, 1998 (inception of offering) to September 30,
1998.
See accompanying Notes to Financial Statements.
25 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. Significant Accounting Policies
Oppenheimer Limited-Term Government Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's investment objective is to seek high
current return and safety of principal. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C
and Class Y Shares. Class A shares are sold with a front-end sales charge on
investments up to $1 million. Class B and Class C shares may be subject to a
contingent deferred sales charge (CDSC). Class Y shares are sold to certain
institutional investors without either a front-end sales charge or a CDSC. All
classes of shares have identical rights to earnings, assets and voting
privileges, except that each class has its own expenses directly attributable to
that class and exclusive voting rights with respect to matters affecting that
class. Classes A, B and C have separate distribution and/or service plans. No
such plan has been adopted for Class Y shares. Class B shares will automatically
convert to Class A shares six years after the date of purchase. The following is
a summary of significant accounting policies consistently followed by the Fund.
- --------------------------------------------------------------------------------
Securities Valuation. Portfolio securities are valued at the close of the New
York Stock Exchange on each trading day. Listed and unlisted securities for
which such information is regularly reported are valued at the last sale price
of the day or, in the absence of sales, at values based on the closing bid or
the last sale price on the prior trading day. Long-term and short-term
"non-money market" debt securities are valued by a portfolio pricing service
approved by the Board of Trustees. Such securities which cannot be valued by an
approved portfolio pricing service are valued using dealer-supplied valuations
provided the Manager is satisfied that the firm rendering the quotes is reliable
and that the quotes reflect current market value, or are valued under
consistently applied procedures established by the Board of Trustees to
determine fair value in good faith. Short-term "money market type" debt
securities having a remaining maturity of 60 days or less are valued at cost (or
last determined market value) adjusted for amortization to maturity of any
premium or discount. Options are valued based upon the last sale price on the
principal exchange on which the option is traded or, in the absence of any
transactions that day, the value is based upon the last sale price on the prior
trading date if it is within the spread between the closing bid and asked
prices. If the last sale price is outside the spread, the closing bid is used.
26 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
- --------------------------------------------------------------------------------
Securities Purchased on a When-Issued Basis. Delivery and payment for securities
that have been purchased by the Fund on a forward commitment or when-issued
basis can take place a month or more after the transaction date. Normally the
settlement date occurs within six months after the transaction date; however,
the Fund may, from time to time, purchase securities whose settlement date
extends beyond six months and possibly as long as two years or more beyond trade
date. During this period, such securities do not earn interest, are subject to
market fluctuation and may increase or decrease in value prior to their
delivery. The Fund maintains segregated assets with a market value equal to or
greater than the amount of its purchase commitments. The purchase of securities
on a when-issued or forward commitment basis may increase the volatility of the
Fund's net asset value to the extent the Fund makes such purchases while
remaining substantially fully invested. As of September 30, 1999, the Fund had
entered into net outstanding when-issued or forward commitments of $25,098,958.
In connection with its ability to purchase securities on a when-issued or
forward commitment basis, the Fund may enter into mortgage dollar-rolls in which
the Fund sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records each dollar-roll as a sale and a new purchase transaction.
- --------------------------------------------------------------------------------
Repurchase Agreements. The Fund requires the custodian to take possession, to
have legally segregated in the Federal Reserve Book Entry System or to have
segregated within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is required
to be at least 102% of the resale price at the time of purchase. If the seller
of the agreement defaults and the value of the collateral declines, or if the
seller enters an insolvency proceeding, realization of the value of the
collateral by the Fund may be delayed or limited.
- --------------------------------------------------------------------------------
Allocation of Income, Expenses, Gains and Losses. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated daily to
each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.
27 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
1. Significant Accounting Policies Continued
Federal Taxes. The Fund intends to continue to comply with provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income, including any net realized gain on
investments not offset by loss carryovers to shareholders. Therefore, no
federal income or excise tax provision is required. As of September 30, 1999,
the Fund had available for federal tax purposes an unused capital loss
carryover of approximately $10,941,000, which expires in 2007.
- --------------------------------------------------------------------------------
Dividends and Distributions to Shareholders. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date.
- --------------------------------------------------------------------------------
Classification of Distributions to Shareholders. Net investment income (loss)
and net realized gain (loss) may differ for financial statement and tax
purposes. The character of distributions made during the year from net
investment income or net realized gains may differ from its ultimate
characterization for federal income tax purposes. Also, due to timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the fiscal year in which the income or realized gain was recorded
by the Fund.
The Fund adjusts the classification of distributions to shareholders to
reflect the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. Accordingly, during the
year ended September 30, 1999, amounts have been reclassified to reflect a
decrease in undistributed net investment income of $1,860,271. Accumulated net
realized loss on investments was decreased by the same amount.
- --------------------------------------------------------------------------------
Expense Offset Arrangements. Expenses paid indirectly represent a reduction of
custodian fees for earnings on cash balances maintained by the Fund.
- --------------------------------------------------------------------------------
Other. Investment transactions are accounted for as of trade date and dividend
income is recorded on the ex-dividend date. Discount on securities purchased is
amortized over the life of the respective securities, in accordance with federal
income tax requirements. Realized gains and losses on investments and options
written and unrealized appreciation and depreciation are determined on an
identified cost basis, which is the same basis used for federal income tax
purposes. Dividends-in-kind are recognized as income on the ex-dividend date, at
the current market value of the underlying security. Interest on payment-in-kind
debt instruments is accrued as income at the coupon rate and a market adjustment
is made periodically.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
28 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
================================================================================
2. Shares of Beneficial Interest
The Fund has authorized an unlimited number of no par value shares of
beneficial interest of each class. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Year Ended September 30, 1999 Year Ended September 30, 1998
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A
Sold 66,430,608 $ 677,416,403 46,472,235 $ 478,261,632
Dividends and/or
distributions reinvested 3,286,062 33,484,949 2,895,623 29,794,401
Redeemed (57,682,659) (587,601,479) (39,072,434) (401,989,832)
-----------------------------------------------------------------------------------
Net increase 12,034,011 $ 123,299,873 10,295,424 $ 106,066,201
===================================================================================
- --------------------------------------------------------------------------------------------------------------------------
Class B
Sold 24,393,651 $ 249,346,429 14,069,222 $ 144,687,126
Dividends and/or
distributions reinvested 1,338,996 13,629,075 871,211 8,965,350
Redeemed (12,618,209) (128,629,777) (5,997,157) (61,656,380)
-----------------------------------------------------------------------------------
Net increase 13,114,438 $ 134,345,727 8,943,276 $ 91,996,096
===================================================================================
- --------------------------------------------------------------------------------------------------------------------------
Class C
Sold 15,315,668 $ 156,476,570 11,346,525 $ 116,547,257
Dividends and/or
distributions reinvested 740,879 7,532,576 448,545 4,607,623
Redeemed (8,885,658) (90,511,492) (5,077,978) (52,110,708)
-----------------------------------------------------------------------------------
Net increase 7,170,889 $ 73,497,654 6,717,092 $ 69,044,172
===================================================================================
- --------------------------------------------------------------------------------------------------------------------------
Class Y
Sold 6,771 $ 67,993 97 $ 1,000
Dividends and/or
distributions reinvested 3 36 -- --
-----------------------------------------------------------------------------------
Net increase 6,774 $ 68,029 97 $ 1,000
===================================================================================
</TABLE>
================================================================================
3. Unrealized Gains and Losses on Securities
As of September 30, 1999, net unrealized depreciation on securities of
$19,862,270 was composed of gross appreciation of $10,879,907, and gross
depreciation of $30,742,177.
29 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
================================================================================
4. Management Fees and Other Transactions with Affiliates
Management Fees. Management fees paid to the Manager were in accordance with
the investment advisory agreement with the Fund which provides for a fee of
0.50% of the first $100 million of average annual net assets of the Fund, 0.45%
of the next $150 million, 0.425% of the next $250 million and 0.40% of average
annual net assets in excess of $500 million. The Fund's management fee for the
year ended September 30, 1999, was 0.42% of average annual net assets for each
class of shares.
- --------------------------------------------------------------------------------
Accounting Fees. The Manager acts as the accounting agent for the Fund at an
annual fee of $12,000, plus out-of-pocket costs and expenses reasonably
incurred.
- --------------------------------------------------------------------------------
Transfer Agent Fees. OppenheimerFunds Services (OFS), a division of the
Manager, is the transfer and shareholder servicing agent for the Fund and other
Oppenheimer funds. OFS's total costs of providing such services are allocated
ratably to these funds.
- --------------------------------------------------------------------------------
Distribution and Service Plan Fees. Under its General Distributor's Agreement
with the Manager, the Distributor acts as the Fund's principal underwriter in
the continuous public offering of the different classes of shares of the Fund.
The compensation paid to (or retained by) the Distributor from the sale of
shares or on the redemption of shares is shown in the table below for the
period indicated.
<TABLE>
<CAPTION>
Aggregate Class A Commissions Commissions Commissions
Front-End Front-End on Class A on Class B on Class C
Sales Charges Sales Charges Shares Shares Shares
on Class A Retained by Advanced by Advanced by Advanced by
Year Ended Shares Distributor Distributor(1) Distributor(1) Distributor(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
September 30, 1999 $4,286,718 $1,064,430 $1,286,163 $4,932,789 $1,269,945
</TABLE>
1. The Distributor advances commission payments to dealers for certain sales of
Class A shares and for sales of Class B and Class C shares from its own
resources at the time of sale.
<TABLE>
<CAPTION>
Class A Class B Class C
Contingent Deferred Contingent Deferred Contingent Deferred
Sales Charges Sales Charges Sales Charges
Year Ended Retained by Distributor Retained by Distributor Retained by Distributor
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
September 30, 1999 $296,928 $1,019,341 $148,244
</TABLE>
The Fund has adopted a Service Plan for Class A shares and Distribution
and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all
or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class.
30 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
- --------------------------------------------------------------------------------
Class A Service Plan Fees. Under the Class A service plan, the Distributor
currently uses the fees it receives from the Fund to pay brokers, dealers and
other financial institutions. The Class A service plan permits reimbursements
to the Distributor at a rate of up to 0.25% of average annual net assets of
Class A shares. The Distributor makes payments to plan recipients quarterly at
an annual rate not to exceed 0.25% of the average annual net assets consisting
of Class A shares of the Fund. For the fiscal year ended September 30, 1999,
payments under the Class A Plan totaled $1,705,756, all of which was paid by
the Distributor to recipients. That included $125,039 paid to an affiliate of
the Distributor's parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in
subsequent years.
- --------------------------------------------------------------------------------
Class B and Class C Distribution and Service Plan Fees. Under each plan,
service fees and distribution fees are computed on the average of the net asset
value of shares in the respective class, determined as of the close of each
regular business day during the period. The Class B and Class C plans provide
for the Distributor to be compensated at a flat rate, whether the Distributor's
distribution expenses are more or less than the amounts paid by the Fund under
the plan during the period for which the fee is paid.
The Distributor retains the asset-based sales charge on Class B shares.
The Distributor retains the asset-based sales charge on Class C shares during
the first year the shares are outstanding. The asset-based sales charges on
Class B and Class C shares allow investors to buy shares without a front-end
sales charge while allowing the Distributor to compensate dealers that sell
those shares.
The Distributor's actual expenses in selling Class B and Class C shares
may be more than the payments it receives from the contingent deferred sales
charges collected on redeemed shares and from the Fund under the plans. If
either the Class B or the Class C plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based sales
charge to the Distributor for distributing shares before the plan was
terminated. The plans allow for the carry-forward of distribution expenses, to
be recovered from asset-based sales charges in subsequent fiscal periods.
Distribution fees paid to the Distributor for the year ended September 30,
1999, were as follows:
<TABLE>
<CAPTION>
Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Total Payments Amount Retained Expenses of Net Assets
Under Plan by Distributor Under Plan of Class
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class B Plan $3,507,623 $2,978,444 $8,380,058 2.10%
Class C Plan 1,870,414 1,226,685 3,414,441 1.62
</TABLE>
31 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
NOTES TO FINANCIAL STATEMENTS Continued
- --------------------------------------------------------------------------------
5. Futures Contracts
The Fund may buy and sell futures contracts in order to gain exposure to or to
seek to protect against changes in interest rates. The Fund may also buy or
write put or call options on these futures contracts.
The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities. The Fund may also purchase futures contracts to gain
exposure to changes in interest rates as it may be more efficient or cost
effective than actually buying fixed income securities.
Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund may recognize a realized gain or loss when the contract is
closed or expires.
Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable
and/or payable for the daily mark to market for variation margin.
Risks of entering into futures contracts (and related options) include
the possibility that there may be an illiquid market and that a change in the
value of the contract or option may not correlate with changes in the value of
the underlying securities.
As of September 30, 1999, the Fund had outstanding futures contracts as follows:
<TABLE>
<CAPTION>
Unrealized
Expiration Number of Valuation as of Appreciation
Contract Description Date Contracts Sept. 30, 1999 (Depreciation)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Contracts to Sell
U.S. Treasury Bonds, 10 yr. 12/20/99 443 $48,785,375 $ 75,594
U.S. Treasury Bonds, 30 yr. 12/20/99 279 31,788,563 (17,250)
U.S. Treasury Nts., 5 yr. 12/20/99 616 66,816,750 (87,719)
---------
$(29,375)
=========
</TABLE>
32 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
================================================================================
6. Bank Borrowings
The Fund may borrow from a bank for temporary or emergency purposes including,
without limitation, funding of shareholder redemptions provided asset coverage
for borrowings exceeds 300%. The Fund has entered into an agreement which
enables it to participate with other Oppenheimer funds in an unsecured line of
credit with a bank, which permits borrowings up to $400 million, collectively.
Interest is charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.35%. Borrowings are payable 30 days after such
loan is executed. The Fund also pays a commitment fee equal to its pro rata
share of the average unutilized amount of the credit facility at a rate of
0.0575% per annum.
The Fund had no borrowings outstanding during the year ended September 30,
1999.
33 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
INDEPENDENT AUDITORS' REPORT
================================================================================
To the Board of Trustees and Shareholders of
Oppenheimer Limited-Term Government Fund:
We have audited the accompanying statement of assets and liabilities, including
the statement of investments, of Oppenheimer Limited-Term Government Fund as of
September 30, 1999, the related statement of operations for the year then
ended, the statements of changes in net assets for the years ended September
30, 1999 and 1998, and the financial highlights for the period October 1, 1994,
to September 30, 1999. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of Oppenheimer
Limited-Term Government Fund as of September 30, 1999, the results of its
operations, the changes in its net assets, and the financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Denver, Colorado
October 21, 1999
34 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
FEDERAL INCOME TAX INFORMATION Unaudited
================================================================================
In early 2000, shareholders will receive information regarding all dividends and
distributions paid to them by the Fund during calendar year 1999. Regulations of
the U.S. Treasury Department require the Fund to report information to the
Internal Revenue Service.
None of the dividends paid by the Fund during the fiscal year ended
September 30, 1999, are eligible for the corporate dividend-received deduction.
The foregoing information is presented to assist shareholders in
reporting distributions received from the Fund to the Internal Revenue Service.
Because of the complexity of the federal regulations which may affect your
individual tax return and the many variations in state and local regulations, we
recommend that you consult your tax advisor for specific guidance.
35 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
================================================================================
Officers and Trustees James C. Swain, Trustee and Chairman of the Board
Bridget A. Macaskill, Trustee and President
William H. Armstrong, Trustee
Robert G. Avis, Trustee
William A. Baker, Trustee
George C. Bowen, Trustee
Jon S. Fossel, Trustee
Sam Freedman, Trustee
Raymond J. Kalinowski, Trustee
C. Howard Kast, Trustee
Robert M. Kirchner, Trustee
Ned M. Steel, Trustee
John S. Kowalik, Vice President
Andrew J. Donohue, Vice President and Secretary
Brian W. Wixted, Treasurer
Robert G. Zack, Assistant Secretary
Robert J. Bishop, Assistant Treasurer
Scott T. Farrar, Assistant Treasurer
================================================================================
Investment Advisor OppenheimerFunds, Inc.
================================================================================
Distributor OppenheimerFunds Distributor, Inc.
================================================================================
Transfer and Shareholder OppenheimerFunds Services
Servicing Agent
================================================================================
Custodian of Citibank, N.A.
Portfolio Securities
================================================================================
Independent Auditors Deloitte & Touche LLP
================================================================================
Legal Counsel Myer, Swanson, Adams & Wolf, P.C.
This is a copy of a report to shareholders
of Oppenheimer Limited-Term Government Fund.
This report must be preceded or accompanied
by a Prospectus of Oppenheimer Limited-Term
Government Fund. For material information
concerning the Fund, see the Prospectus.
Shares of Oppenheimer funds are not deposits
or obligations of any bank, are not
guaranteed by any bank, are not insured by
the FDIC or any other agency, and involve
investment risks, including the possible
loss of the principal amount invested.
36 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
OPPENHEIMERFUNDS FAMILY
<TABLE>
<CAPTION>
<S> <C> <C>
===========================================================================================================
Global Equity
- -----------------------------------------------------------------------------------------------------------
Developing Markets Fund Global Fund
International Small Company Fund Quest Global Value Fund
Europe Fund Global Growth & Income Fund
International Growth Fund
===========================================================================================================
Equity
- -----------------------------------------------------------------------------------------------------------
Stock Stock & Bond
Enterprise Fund(1) Main Street(R) Growth & Income Fund
Discovery Fund Quest Opportunity Value Fund
Main Street(R) Small Cap Fund Total Return Fund
Quest Small Cap Value Fund Quest Balanced Value Fund
MidCap Fund Capital Income Fund(2)
Capital Appreciation Fund Multiple Strategies Fund
Growth Fund Disciplined Allocation Fund
Disciplined Value Fund Convertible Securities Fund
Quest Value Fund
Trinity Growth Fund Specialty
Trinity Core Fund Real Asset Fund
Trinity Value Fund Gold & Special Minerals Fund
===========================================================================================================
Fixed Income
- -----------------------------------------------------------------------------------------------------------
Taxable Municipal
International Bond Fund Main Street(R) California Municipal Fund(3)
World Bond Fund California Municipal Fund(3)
High Yield Fund Florida Municipal Fund(3)
Champion Income Fund New Jersey Municipal Fund(3)
Strategic Income Fund New York Municipal Fund(3)
Bond Fund Pennsylvania Municipal Fund(3)
Senior Floating Rate Fund Municipal Bond Fund
U.S. Government Trust Insured Municipal Fund
Limited-Term Government Fund Intermediate Municipal Fund
Rochester Division
Rochester Fund Municipals
Limited Term New York Municipal Fund
==========================================================================================================
Money Market(4)
- ----------------------------------------------------------------------------------------------------------
Money Market Fund Cash Reserves
</TABLE>
1. Effective July 1, 1999, this fund is closed to new investors. See prospectus
for details.
2. On 4/1/99, the Fund's name was changed from "Oppenheimer Equity Income Fund."
3. Available to investors only in certain states.
4. An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
these funds may seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in these funds.
Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., Two
World Trade Center, New York, NY 10048-0203.
(C) Copyright 1999 OppenheimerFunds, Inc. All rights reserved.
37 OPPENHEIMER LIMITED-TERM GOVERNMENT FUND
<PAGE>
INFORMATION AND SERVICES
As an Oppenheimer fund shareholder, you can benefit from special services
designed to make investing simple. Whether it's automatic investment plans,
timely market updates, or immediate account access, you can count on us whenever
you need assistance. So call us today, or visit our website--we're here to help.
- --------------------------------------------------------------------------------
Internet
24-hr access to account information and transactions
www.oppenheimerfunds.com
- --------------------------------------------------------------------------------
General Information
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.525.7048
- --------------------------------------------------------------------------------
Telephone Transactions
Mon-Fri 8:30am-9pm ET, Sat 10am-4pm ET
1.800.852.8457
- --------------------------------------------------------------------------------
PhoneLink
24-hr automated information and automated transactions
1.800.533.3310
- --------------------------------------------------------------------------------
Telecommunications Device for the Deaf (TDD)
Mon-Fri 8:30am-7pm ET
1.800.843.4461
- --------------------------------------------------------------------------------
OppenheimerFunds Information Hotline
24 hours a day, timely and insightful messages on the
economy and issues that may affect your investments
1.800.835.3104
- --------------------------------------------------------------------------------
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270, Denver, CO 80217-5270
- --------------------------------------------------------------------------------
[OppenheimerFunds Logo] OppenheimerFunds(R)
Distributor, Inc.
RA0855.001.0999 November 29, 1999
